WEBVTT 00:00:00.000 --> 00:00:02.560 Welcome to the deep dive. Ever notice how gold 00:00:02.560 --> 00:00:06.259 prices seem to just, well, sort of glide along 00:00:06.259 --> 00:00:09.220 while silver's price action feels more like a, 00:00:09.220 --> 00:00:11.720 I don't know, a bucking bronco sometime. Yeah, 00:00:11.720 --> 00:00:14.359 definitely. It could be quite the ride. So today 00:00:14.359 --> 00:00:16.679 we're digging into exactly why that happens. 00:00:16.739 --> 00:00:18.660 We've got this really interesting article by 00:00:18.660 --> 00:00:22.339 Doug Young that breaks down the volatility difference 00:00:22.339 --> 00:00:24.920 between these two. Exactly. And when we say volatility, 00:00:25.100 --> 00:00:27.539 just to be clear, we mean how much the price 00:00:27.539 --> 00:00:31.039 swings up and down over time. Right. Big swings 00:00:31.039 --> 00:00:34.299 mean potential for big gains. But also you have 00:00:34.299 --> 00:00:36.359 bigger risks. So our mission here is to really 00:00:36.359 --> 00:00:38.820 get under the hood and understand why silver 00:00:38.820 --> 00:00:41.399 tends to be so much more, well, volatile than 00:00:41.399 --> 00:00:43.859 gold. We'll be using the insights from that Doug 00:00:43.859 --> 00:00:46.159 Young piece. OK, let's unpack this then. The 00:00:46.159 --> 00:00:47.600 article starts by pointing out something pretty 00:00:47.600 --> 00:00:50.100 clear. Gold generally shows less volatility, 00:00:50.399 --> 00:00:53.880 fewer dramatic swings than silver. So what's 00:00:53.880 --> 00:00:57.020 the main reason gold is more? It really comes 00:00:57.020 --> 00:00:59.560 down to gold's established reputation. It's seen 00:00:59.560 --> 00:01:02.880 as a safe haven asset. A safe haven. So, you 00:01:02.880 --> 00:01:05.640 know, when the economy looks shaky or there's 00:01:05.640 --> 00:01:09.099 inflation worry or currency issues, geopolitical 00:01:09.099 --> 00:01:14.219 tension, people tend to turn to gold. Like a 00:01:14.219 --> 00:01:16.599 security blanket for your money? Sort of, yeah. 00:01:16.750 --> 00:01:19.290 Historically, it's been a store of value. That 00:01:19.290 --> 00:01:22.030 perception really helps keep its price steadier, 00:01:22.390 --> 00:01:24.329 especially when things are turbulent elsewhere. 00:01:24.670 --> 00:01:26.709 It acts like an anchor. OK, that makes perfect 00:01:26.709 --> 00:01:29.670 sense. The reliable old guard. So flip side, 00:01:30.549 --> 00:01:34.370 why is silver so prone? to those bigger ups and 00:01:34.370 --> 00:01:36.829 downs. Ah, silver is interesting. The key is 00:01:36.829 --> 00:01:38.950 its dual personality. It's not just a precious 00:01:38.950 --> 00:01:41.750 metal for investors. It's also a really vital 00:01:41.750 --> 00:01:44.349 industrial commodity. So its demand isn't just 00:01:44.349 --> 00:01:46.790 about investor sentiment. It's heavily tied to 00:01:46.790 --> 00:01:48.969 how well the global economy is doing, what industries 00:01:48.969 --> 00:01:52.069 need. So it's like. Gold is mostly treasure in 00:01:52.069 --> 00:01:54.510 a vault, but silver is treasure plus it's inside 00:01:54.510 --> 00:01:56.689 your phone, your solar panels. Exactly. It gets 00:01:56.689 --> 00:01:58.549 used up in manufacturing. That's a crucial difference. 00:01:58.890 --> 00:02:00.370 Okay, so the industrial demand part. When the 00:02:00.370 --> 00:02:02.230 economy is booming, factories are churning out 00:02:02.230 --> 00:02:04.370 goods and need more silver for electronics, solar, 00:02:04.489 --> 00:02:07.430 whatever. That pushes the price up. Precisely. 00:02:07.730 --> 00:02:11.189 Demand increases, price tends to follow. But 00:02:11.189 --> 00:02:14.909 the reverse is also true. Right. Economic slowdown, 00:02:15.110 --> 00:02:17.669 less manufacturing. Yep, industrial demand for 00:02:17.669 --> 00:02:19.930 silver can fall off a cliff. And that leads to 00:02:19.930 --> 00:02:22.710 some pretty sharp price drops. It's this constant 00:02:22.710 --> 00:02:26.150 push -pull from industry that really fuels silver's 00:02:26.150 --> 00:02:28.669 volatility. And the article notes the market 00:02:28.669 --> 00:02:30.909 size is also a big piece of this puzzle. OK, 00:02:31.169 --> 00:02:34.270 market size. And also, the article mentions how 00:02:34.270 --> 00:02:36.650 economists measure the sensitivity to market 00:02:36.650 --> 00:02:39.620 swings. Beta coefficients, I think. Right, beta. 00:02:40.120 --> 00:02:42.060 It's a way to measure how much an asset's price 00:02:42.060 --> 00:02:44.020 tends to move compared to the overall market. 00:02:44.560 --> 00:02:46.900 A beta of one means it moves with the market. 00:02:47.240 --> 00:02:50.159 Over one, more volatile. Under one, less volatile. 00:02:50.379 --> 00:02:53.099 And historically. Gold's beta is generally lower 00:02:53.099 --> 00:02:55.439 than silver's. It reflects that relative stability 00:02:55.439 --> 00:02:57.919 we talked about. Silver's is higher. largely 00:02:57.919 --> 00:03:00.020 because of that industrial connection, making 00:03:00.020 --> 00:03:03.060 it more susceptible to economic cycles. So using 00:03:03.060 --> 00:03:05.300 your analogy, if the market sneezes, silver is 00:03:05.300 --> 00:03:07.860 more likely to catch pneumonia, while gold might 00:03:07.860 --> 00:03:10.139 just get the sniffles. Huh. Yeah, that's a pretty 00:03:10.139 --> 00:03:12.000 good way to put it. And if you look at the actual 00:03:12.000 --> 00:03:15.500 price history, this plays out. How so? Gold often 00:03:15.500 --> 00:03:19.240 rallies during big economic crises. Investors 00:03:19.240 --> 00:03:22.580 run to safety, right? Yeah. Silver's reaction 00:03:22.580 --> 00:03:24.979 during those times can be way more unpredictable. 00:03:25.939 --> 00:03:28.800 Investment demand might rise, sure, but falling 00:03:28.800 --> 00:03:30.699 industrial demand can pull it the other way at 00:03:30.699 --> 00:03:34.819 the same time. It gets whipsawed. And, um, over 00:03:34.819 --> 00:03:38.360 the longer term, does one show steadier growth? 00:03:38.719 --> 00:03:41.860 Generally, yes. Gold has tended to show more 00:03:41.860 --> 00:03:44.719 consistent. albeit sometimes slow long -term 00:03:44.719 --> 00:03:47.219 growth. Silver can have these really explosive 00:03:47.219 --> 00:03:49.919 bursts upwards. Driven by industry or speculation. 00:03:50.300 --> 00:03:52.259 Exactly. Yeah. But it hasn't really followed 00:03:52.259 --> 00:03:55.000 that same steady upward trajectory as gold over 00:03:55.000 --> 00:03:58.199 the very long run. It's more, well, spiky. Now 00:03:58.199 --> 00:04:00.219 let's get back to that market size and liquidity 00:04:00.219 --> 00:04:02.580 point. We hear those terms a lot. Why are they 00:04:02.580 --> 00:04:04.120 so important here? Okay, think about it this 00:04:04.120 --> 00:04:07.159 way. Gold has a much larger market. It's traded 00:04:07.159 --> 00:04:09.259 more actively. There's more of it readily available. 00:04:09.419 --> 00:04:11.979 More buyers and sellers at any given time. Right. 00:04:12.319 --> 00:04:13.819 Central banks hold tons of it. There's a whole 00:04:13.819 --> 00:04:16.319 jewelry industry. It makes the market deep and 00:04:16.319 --> 00:04:18.420 liquid. Liquidity just means you can buy or sell 00:04:18.420 --> 00:04:20.779 a lot without drastically moving the price. Like 00:04:20.779 --> 00:04:23.720 pouring water into a huge lake versus a small 00:04:23.720 --> 00:04:27.259 pond. Perfect analogy. The lake barely notices. 00:04:27.829 --> 00:04:31.009 Gold's market is the lake. Big trades get absorbed 00:04:31.009 --> 00:04:33.589 relatively easily. And silver is the smaller 00:04:33.589 --> 00:04:37.389 pond. Exactly. Its market is thinner, less liquid. 00:04:37.810 --> 00:04:40.149 So even moderate amounts of buying or selling 00:04:40.149 --> 00:04:43.350 can make the price jump or fall much more significantly. 00:04:43.449 --> 00:04:45.509 Which creates more opportunity. Potentially, 00:04:45.709 --> 00:04:47.990 yes. Higher potential returns. But it definitely 00:04:47.990 --> 00:04:49.730 comes with higher risk because the swings can 00:04:49.730 --> 00:04:52.129 be much sharper, both up and down. The article 00:04:52.129 --> 00:04:54.970 also mentioned correlation. That gold and silver 00:04:54.970 --> 00:04:58.699 often move together. Yeah. Not always. Yeah, 00:04:58.839 --> 00:05:00.600 that's the general tendency. They're both precious 00:05:00.600 --> 00:05:03.040 metals, influenced by some similar factors like 00:05:03.040 --> 00:05:06.220 inflation fears or the dollar's value. So often 00:05:06.220 --> 00:05:07.939 they trend in the same direction. But the not 00:05:07.939 --> 00:05:10.060 always part. That's where silver's industrial 00:05:10.060 --> 00:05:12.620 side comes in again. If there's a huge surge 00:05:12.620 --> 00:05:15.540 in demand for, say, solar panels, silver's price 00:05:15.540 --> 00:05:18.100 might take off even if gold is just sitting there 00:05:18.100 --> 00:05:21.019 or even falling slightly. Ah, so its industrial 00:05:21.019 --> 00:05:23.139 identity can cause it to break ranks sometimes? 00:05:23.560 --> 00:05:26.699 Precisely. especially during periods of strong 00:05:26.699 --> 00:05:29.779 economic growth when industrial demand really 00:05:29.779 --> 00:05:31.980 heats up. OK, let's zoom out slightly. Think 00:05:31.980 --> 00:05:35.500 about the big picture factors. Economic conditions 00:05:35.500 --> 00:05:38.220 seem huge here. We've touched on this, but maybe 00:05:38.220 --> 00:05:41.040 summarize. Sure. For silver, economic growth 00:05:41.040 --> 00:05:42.939 is generally good news because of industrial 00:05:42.939 --> 00:05:45.660 demand. Price tends to go up. Downturns or bad 00:05:45.660 --> 00:05:47.879 price tends to go down. And gold. Gold often 00:05:47.879 --> 00:05:50.259 does the opposite in a way. It shines during 00:05:50.259 --> 00:05:54.000 instability. recession fears, high inflation. 00:05:54.660 --> 00:05:57.019 That's when investors often pile into gold, boosting 00:05:57.019 --> 00:05:59.839 its price. It's the fear trade asset. Got it. 00:06:00.079 --> 00:06:03.240 What about geopolitical stuff? Wars, political 00:06:03.240 --> 00:06:07.000 chaos? How do they impact the two differently? 00:06:07.560 --> 00:06:09.959 Similar pattern, really. Geopolitical uncertainty 00:06:09.959 --> 00:06:12.439 usually sends investors looking for safety. And 00:06:12.439 --> 00:06:14.360 historically, that means gold. So its price tends 00:06:14.360 --> 00:06:16.600 to rise in those situations. And silver, still 00:06:16.600 --> 00:06:18.800 more complex. Yeah. It feels the uncertainty 00:06:18.800 --> 00:06:21.279 too. But again, that industrial link. complicates 00:06:21.279 --> 00:06:23.100 things. Trade wars, for instance, might hurt 00:06:23.100 --> 00:06:25.639 manufacturing. Which hurts silver demand. Right. 00:06:25.779 --> 00:06:28.040 So even if there's some safe haven buying of 00:06:28.040 --> 00:06:31.019 silver, a drop in industrial demand due to trade 00:06:31.019 --> 00:06:33.439 tensions could pull its price down or make it 00:06:33.439 --> 00:06:36.560 swing wildly. Gold's reaction is usually more 00:06:36.560 --> 00:06:39.319 straightforwardly positive in a crisis. So focusing 00:06:39.319 --> 00:06:42.000 just on that industrial use aspect, it's fair 00:06:42.000 --> 00:06:45.139 to say that's the primary driver of silver's 00:06:45.139 --> 00:06:47.639 extra volatility compared to gold. It's certainly 00:06:47.639 --> 00:06:50.019 one of the biggest factors, yes. The constant 00:06:50.019 --> 00:06:52.759 ebb and flow of demand from electronics, solar, 00:06:53.019 --> 00:06:56.810 medical uses, all that. It directly impacts silver's 00:06:56.810 --> 00:06:58.470 price in a way that just doesn't happen with 00:06:58.470 --> 00:07:00.910 gold to nearly the same extent. Because gold's 00:07:00.910 --> 00:07:03.430 value is tied more to investment and store value 00:07:03.430 --> 00:07:06.089 perception. Exactly. Less about being consumed 00:07:06.089 --> 00:07:09.089 by industry. More about being held. Okay, last 00:07:09.089 --> 00:07:13.689 factor. Investor sentiment. Market mood. How 00:07:13.689 --> 00:07:15.529 does that play out? Oh, sentiment definitely 00:07:15.529 --> 00:07:17.970 matters for both. When markets are optimistic, 00:07:18.209 --> 00:07:20.449 risk appetite is high. Investors might sell some 00:07:20.449 --> 00:07:22.670 gold to buy riskier assets, so gold price might 00:07:22.670 --> 00:07:24.990 dip. And when everyone's pessimistic. They run 00:07:24.990 --> 00:07:27.589 back to gold. Standard safe haven behavior. For 00:07:27.589 --> 00:07:29.670 silver, though, sentiment can amplify things 00:07:29.670 --> 00:07:33.050 even more. Well, positive sentiment about economic 00:07:33.050 --> 00:07:35.670 growth can really boost silver because of the 00:07:35.670 --> 00:07:39.110 industrial outlook. But negative sentiment can 00:07:39.110 --> 00:07:42.370 hit it with a double whammy. Investors get cautious 00:07:42.370 --> 00:07:44.769 and expectations for industrial demand fall. 00:07:44.879 --> 00:07:46.939 So it can lead to sharper declines for silver. 00:07:47.199 --> 00:07:49.680 It certainly can. Silver seems more sensitive 00:07:49.680 --> 00:07:52.579 to the overall economic mood, affecting both 00:07:52.579 --> 00:07:55.180 its investment appeal and its industrial demand 00:07:55.180 --> 00:07:58.500 forecast simultaneously. OK, wow. So if we try 00:07:58.500 --> 00:08:00.839 and boil down Doug Young's analysis, the core 00:08:00.839 --> 00:08:04.639 takeaway seems to be gold lower volatility because 00:08:04.639 --> 00:08:07.220 it's mainly that safe haven store value asset. 00:08:07.240 --> 00:08:09.480 Right. Silver higher volatility because it's 00:08:09.480 --> 00:08:11.779 got that crucial industrial role. Plus, it's 00:08:11.779 --> 00:08:14.839 a smaller, less liquid market. it up really well 00:08:14.839 --> 00:08:17.420 and for you listening and maybe thinking about 00:08:17.420 --> 00:08:19.639 investing this difference is pretty critical. 00:08:19.779 --> 00:08:22.000 Yeah what are the implications? Well silver clearly 00:08:22.000 --> 00:08:24.240 offers the potential for faster higher percentage 00:08:24.240 --> 00:08:27.019 gains but you have to be prepared for potentially 00:08:27.019 --> 00:08:29.620 much larger drops too. It requires a stronger 00:08:29.620 --> 00:08:31.980 stomach for risk. Whereas gold? Gold is generally 00:08:31.980 --> 00:08:34.539 the steadier choice. Less likely to give you 00:08:34.539 --> 00:08:37.419 those explosive returns perhaps but also less 00:08:37.419 --> 00:08:39.799 likely to cause major heartburn during market 00:08:39.799 --> 00:08:42.450 turmoil. It's more about capital preservation 00:08:42.450 --> 00:08:45.370 and a hedge against uncertainty. This has been 00:08:45.370 --> 00:08:47.629 really clarifying. So thinking about everything 00:08:47.629 --> 00:08:50.970 we've discussed, gold stability, silver's industrial 00:08:50.970 --> 00:08:54.549 ties, market size, it raises a final thought 00:08:54.549 --> 00:08:57.909 for me. With the huge push towards green technologies, 00:08:58.190 --> 00:08:59.909 especially things like solar panels, which use 00:08:59.909 --> 00:09:03.490 a lot of silver, and electric vehicles too. Could 00:09:03.490 --> 00:09:06.690 that dramatically increasing and maybe more consistent 00:09:06.690 --> 00:09:09.769 industrial demand fundamentally change silver's 00:09:09.769 --> 00:09:12.330 volatility profile in the future? Could it start 00:09:12.330 --> 00:09:14.250 acting, I don't know, a little less wild compared 00:09:14.250 --> 00:09:16.809 to gold? Hmm. That's a fascinating question. 00:09:17.250 --> 00:09:19.889 Will massive, sustained industrial demand start 00:09:19.889 --> 00:09:22.429 to outweigh these speculative and smaller market 00:09:22.429 --> 00:09:24.710 factors? It's definitely something worth pondering 00:09:24.710 --> 00:09:26.929 as those technologies evolve. Something for you 00:09:26.929 --> 00:09:28.710 all to think about, too. Thanks for joining us 00:09:28.710 --> 00:09:29.429 for this deprive.